GMAC Submits New Tariff Petition To US Regulators

Garment and footwear makers are set to submit today a petition to the government of the United States to give Cambodian footwear exports preferential trade treatment under the US Generalised System of Preference (GSP) scheme. The new submission follows the announcement that the US government is due to review its GSP program for least-developed countries (LSDs) by the end of the year.

Footwear manufacturing is one of the most important industries in Cambodia. KHMER TIMES / CHOR SOKUNTHEA

Kaing Monika, deputy secretary-general of the Garment Manufacturers Association in Cambodia (GMAC) told Khmer Times on Monday that GMAC will submit the petition today to make sure it doesn’t miss the deadline. Monika said the petition had the full support of the Ministry of Commerce. “Currently, GSP coverage for Cambodia does not include garment and footwear articles, major export products for Cambodia,” he said.

“The US government is now reviewing its annual GSP policy, and GMAC is engaging a Washington-based law firm to help with its request, which if successful would tremendously help the Cambodian economy in term of export growth, new investment and employment generation for thousands of Cambodians,” added Monika.

Commerce secretary of state Ok Boung told the US trade representative during a visit to the Kingdom in late August that, according to the spirit of the Joint Declaration of the Ministerial Conference in Hong Kong, the US government should be giving tariff-free, quota-free treatment to at least 97 percent of products coming from least-developed nations.

However, according to Boung, only 82.6 percent of Cambodian products currently enjoy preferential trade treatment with the US. He said many developed nations have already fulfilled their obligations towards least developed nations, and that the US should do likewise.

Australia, New Zealand, Norway and Switzerland give preferential trade treatment to 100 percent of Cambodian products. The European Union, under the Everything but Arms (EBA) treaty, allows the importation of 99 percent of products duty and quota free. Canada gives preferential treatment to 98.6 percent of Cambodian products, Japan to 97.9 percent and China to 97 percent. “The US has been granting GSP treatment to roughly 82.6 percent of Cambodian products, but this doesn’t include Cambodia’s main and most important products. These products still have to pay duties,” said Boung.

Monika said that, according to the staff of the Committee of Jurisdiction, the House Ways and Means Committee and the Senate Finance Committee, there will be a concerted effort to renew the overall GSP program before it expires on December 31. He said footwear remains a sensitive industry in US trade policy, which will prevent the inclusion of certain types of footwear in the GSP scheme, and the amount of lost tariff revenue will also limit the scope of footwear that can be included.

“GMAC is hopeful of its efforts, though the renewal is not guaranteed to occur before the expiration at the end of this year due to a challenging calendar, especially with the delayed congressional action on major health care reform and tax reform bills,” said Monika.

“Early or later, GMAC is hopeful that this petition would receive positive response from the US government in consideration of our continuous efforts to improve working conditions in Cambodia, especially the raise of wages which has led to better welfare for workers. If the program is not extended by the end of this year, the effort will continue through the end of the current Congress in December 2018.”

In July last year, the US government granted duty-free benefits for Cambodia for the export of travel goods such as luggage, backpacks, handbags and wallets under the GSP. Presently, GMAC has some 59 footwear manufacturing factories and exported $700 million worth of goods last year.

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